Consumer Association, Kozhikode Jilla v. State of Kerala, Union of India & Commissioner, Commercial Taxes

## IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH THURSDAY, THE 21ST FEBRUARY 2008 / 2ND PHALGUNA 1929 W.P.(C).No.3321 of 2008(S) ------------------------------------------------------- PETITIONER:- -------------------- CONSUMER ASSOCIATION, KOZHIKODE JILLA, REPRESENTED BY ITS GENERAL SECRETARY, S.USMAN KOYA, 9/1024, BIG BAZAR, KOZHIKODE-673 001. BY ADV. SRI.K.I.MAYANKUTTY MATHER SRI.V.V.PADMANABHAN RESPONDENTS:- ------------------------- 1. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, KERALA GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695 003. 2. UNION OF INDIA, REPRESENTED BY SECRETARY TO GOVERNMENT, MINISTRY OF FINANCE, CENTRAL SECRETARIAT, NEW DELHI-110 010. 3. THE COMMISSIONER, COMMERCIAL TAXES, THIRUVANANTHAPURAM - 695 003. R1 & R3 BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:- ## **H.L. Dattu, C.J. & K.M.Joseph, J.** ----------------------------------------------W.P.(C).No.3321 of 2008-S ----------------------------------------------Dated, this the 21[st] day of February, 2008 ## **JUDGMENT** ## **H.L.Dattu,C.J.** The petitioner is a Consumer Association. It is registered as a society under the provisions of the Societies Registration Act, 1860. It is stated that the objects of the Society is to take steps to alleviate the grievances of the consumer public and to take up the common issues of the consumers for redressal before appropriate forums. (2) In this public interest litigation filed under Article 226 of the Constitution, the petitioner primarily questions the levy of tax on the sales turnover of live chicken under the provisions of the Kerala Value Added Tax Act, 2003. It is stated in the petition, that, chicken is a common nutrient food item of the people of the State of Kerala and it is less expensive food item now available in the market amongst meat products, which common people can avail at affordable rates. It is further stated that the rate of chicken has however gone up in the State of Kerala considerably only on account of the impost of VAT on the sales turnover of chicken and therefore, the levy of tax on the sales turnover of live chicken under the KVAT Act, 2003 is illegal on the ground that the same is against the very scheme and spirit of the introduction of Value Added Tax Act. Therefore, in this Public Interest Litigation, the petitioner seeks the following reliefs. They are:- > “(a) to issue an appropriate writ or order declaring that live chicken (poultry) is an exempted commodity under the Kerala Value Added Tax Act along with the exempted group of live stock; W.P.(C).No.3321 of 2008-S - 2 - (b) issue a writ of mandamus or other appropriate writ or order directing the 1[st] respondent to make appropriate amendments in the Kerala Value Added Tax Act to exempt live chicken (poultry) from taxation”. (3) The case is posted for admission. Keeping in view the observations made by the Apex Court in **Janata Dal vs. H.S.Chowdhary,** AIR 1993 SC 892, wherein it is stated that the requirement of locus standi of a party to a litigation is mandatory, because the legal capacity of the party to any litigation whether in private or public action in relation to any specific remedy sought for has to be primarily ascertained at the threshold, we asked the learned counsel to convince us on the 'locus standi' of the petitioner who has approached us for a relief primarily in the nature of mandamus to direct the State of Kerala to grant exemption from payment of tax under the provisions of the VAT Act on the sale of poultry (chicken), both in intra and inter-State trade. The learned counsel has brought to our notice the decision of the Apex Court in the case of **Indian Banks' Association, Bombay vs. Devkala Consultancy Service** (2004) 11 SCC 1. That was a case where the petitioner before the High Court was a firm of Chartered accountants. As an expert in accountancy and auditing, it must have come across several cases where its clients had to pay a higher amount of interest to the Banks pursuant to or in furtherance of the impugned action of the appellants. By reason of such an action on the part of the appellants as also the Reserve Bank of India, the citizens of India had to pay a higher amount of tax as also a higher amount of interest for no fault on their part and further the same had been recovered from them without any authority of law. The Apex Court, keeping in view the facts and circumstances of that case, has observed that while entertaining a public interest litigation, this court in exercise of its jurisdiction under Article 32 of the W.P.(C).No.3321 of 2008-S - 3 - Constitution of India and the High Courts under Article 226 thereof are entitled to entertain a petition moved by a person having knowledge in the subject matter of lis and thus, having interest therein, as contra-distinguished from a busybody, in the welfare of the people. The concept of 'locus' has been relaxed by the courts for such purposes with a view to enable a citizen of India to approach the courts to vindicate legal injury or legal wrong caused to a section of people by way of violation of any statutory or constitutional right. In fact, at paragraph 34 of the judgment the Court has traced the history of public interest litigation and the reason why the Courts had to entertain the public interest litigations in order to do justice to the community at large, in particular, the poorest of the poor, depraved, the illiterate, the urban and rural unorganized labour sector, women, children, handicapped persons, etc. (4) The learned counsel has also brought to our notice the observations made by the apex Court in the case of _**Arya Vaidya Pharmacy**_ **v.** _**State of Tamil Nadu**_ [(1989) 73 STC 346]. In our opinion, the decision on which reliance is placed by the learned counsel for the petitioner has nothing to do with the facts and circumstances of the present case. Therefore, we need not have to make reference to the said decision. (5) After hearing the learned counsel for the petitioner, in our view, two issues arise for our consideration and decision. They are, whether the petitioner has locus standi to maintain the writ petition, and secondly, whether the relief sought for can be granted by us in a public interest litigation. (6). Re. Issue No.1:- Public Interest Litigation is a new type of litigation initiated by the judiciary to enable the poor and vulnerable sections of society to approach he court to enforce their statutory and constitutional rights. W.P.(C).No.3321 of 2008-S - 4 - In the opinion of Justice P.N.Bhagawati (People's Union for Democratic Rights vs. Union of India, AIR 1982 SC 1473), public interest litigation is essentially a co-operative effort on the part of the petitioner, the public authority and the court, to secure the observance of the Constitution and legal rights and principles conferred upon the vulnerable sections of the community and to reach social justice to them. Public Interest Litigation is for the benefit of class of people who are denied their constitutional and legal rights, because such groups cannot approach constitutional courts due to socio-economic disabilities. (7) The concept of 'locus standi' has been comprehensively explained by the Apex Court in **S.P.Gupta's** case (AIR 1982 SC 149). In the said decision, the court has observed: “Where a legal wrong or legal injury is caused to a person or to a determinable class of persons by reason of violation of any constitutional or legal right or any burden is imposed in contravention of any constitutional or legal provision or without authority of law or any such legal wrong or legal injury or illegal burden is threatened and such person or determinate class of persons is by reason of poverty, helplessness or disability or socially or economically disadvantaged position, unable to approach the court for relief, any member of the public can maintain an application for an appropriate direction, order or writ in the High Court under Article 226 and in case of breach of any fundamental right of such person or determinate class of such persons.”. (8) The traditional rule in regard to 'locus standi' is that judicial redress is available only to a person who has suffered a legal injury by reason of violation of his legal right or legally protected right by the impugned action of the State or a public authority or any other person or who is likely to suffer a W.P.(C).No.3321 of 2008-S - 5 - legal injury by reason of threatened violation of his legal right or legally protected interest by any such action. The Apex Court while considering the issue of locus of a person has categorised three category of petitioners. The first category consists of persons whose legal rights are directly or substantially affected, the second category consists of persons who do not claim to have suffered any loss or damage but claim injury as member of the public and the third category consists of persons are total strangers, i.e. meddlesome interlopers. In Judges Transfer case (S.P.Gupta vs. Union of India), the Apex Court has observed that the individual who moves the court for judicial redress must be acting bona fide with a view to vindicating the cause of justice and if he is acting for personal gain or private profit or out of political motivation or other oblique consideration, the court should not allow itself to be as much active at the instance of such person and must reject his application at the threshold itself. (9). Dealing with public interest litigation, the Supreme Court and high courts in a number of decisions, have quite extensively dealt with questions such as, who can be considered to be a pro bono public character, what kinds of disputes could be brought before the constitutional courts in the form of public interest litigation, the circumspection to be exercised by the courts before entertaining a public interest litigation, the danger of entertaining applications filed under Art.226 of the Constitution with a facade or under the garb of public interest litigation. What can be gathered from these pronouncements is that, ordinarily, it is the person aggrieved and directly affected who must seek the relief himself unless disabled from doing so on account of socio-economic disabilities and only in such event the law permits someone else to seek the relief on his behalf. Public interest litigation is W.P.(C).No.3321 of 2008-S - 6 - essentially to ensure observations of the provisions of the Constitution or the law which can be best achieved to advance the cause of community or disadvantaged groups and individuals or public interest by permitting any person, acting bona fide and having genuine interest in maintaining an action for judicial redress for public injury to put the judicial machinery in motion like _action popularis_ of Roman law whereby citizen could bring such an action in respect of a public duty. Individual dispute cannot be subject matter of a public interest litigation and any attempt in that regard should be discouraged by the court, and it is only in the clearest of cases of general affectation of right of the community at large or a wide variety of cross-section of people, the court would extend its assistance by entertaining a public interest litigation, so as to avoid any social or general mischief having due regard to the concept of justice. However, only a person acting bona fide and having sufficient interest in the proceeding of public interest litigation will alone have a locus standi and can approach the court for the poor and needy, suffering from violation of their fundamental rights or other legal rights and to enforce public law duties against the administration. But a person for personal gain or private profit or political motive or any oblique consideration has no locus standi. Similarly, a vexatious petition under the colour or garb of public interest litigation brought before the court for vindicating any personal grievance, deserves rejection at the threshold. The court should not allow its process to be abused by mere busybodies, meddlesome interlopers, wayfarers or officious interveners having absolutely no public interest in their mind or heart except for a personal gain or private profit or political mileage either for themselves or as proxy of others or for any other extraneous motivation or collateral consideration or for gaining publicity. W.P.(C).No.3321 of 2008-S - 7 - (10). The petitioner is only a consumer association. In the petition filed, the primary grievance of the petitioner's association is that in view of the imposition of tax on the sale of poultry (chicken) which is a common nutrient food of the people of the State, the rate of chicken has gone up in the State and thereby large number of persons in the State are affected and therefore, a request is made in the petition to declare that live chicken (poultry) is an exempted commodity under KVAT Act. In our view, going by the law declared by the Apex Court, the petitioner's association has no locus standi to maintain this writ petition. This petition is filed, in our view, only at the behest and instigation of the dealers engaged in the business of sale of chicken in the State of Kerala and not with a view to redress the alleged grievance of the public at large. Therefore, we answer Issue No.I against the petitioner. (11). Re. Issue No.II:- The power to tax is an inherent sovereign power of a State to collect contribution of money or other property from its citizens and the inhabitants of its territory for defraying its general expenditure. Its strategic position in the modern welfare State is such that, without it no government can adequately discharge its manifold duties. The essential nature of tax lies in its being burden or charge imposed by the legislative power on persons or property for public purposes. Taxation proceeds on the theory that the very existence of Government is a necessity and the tax payer is supposed to receive his just compensation in the protection which the Government affords to life, liberty and property. Being an essential and inherent attribute of sovereignty, the constitutional provisions with respect to taxation are considered as limitations on the power and not as the grant of power of taxation. Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law. It is the legislature and the W.P.(C).No.3321 of 2008-S - 8 - legislature alone by enacting a provision in accordance with the constitutional provision, can impose tax on transactions, objects etc. The executive as well as the judiciary are powerless to impose any tax. It is for the legislature to determine the circumstances and the conditions to fasten the tax liability and such other incidental matters. The legislature while imposing a tax may choose to impose the liability on persons from whom the collection of tax is most convenient. The legislature while levying the tax may exempt persons or transactions from such liability where it deems inexpedient or uneconomical to collect tax from them. The exemption given in such cases usually take the form of graduated rate of taxation. Administrative convenience and expediency also play their part in the quantification of tax, which a person should pay. Generally, tax statutes contain provisions exempting cases from the liability of tax. The legislature has power to exempt as well as withdraw such exemption. (12). Even before the coming of public interest litigation, the consistent view of the courts was that the courts are not to consider relative merits of the different political theories or economic policies. The court has the power to strike down a law on the ground of want of authority, but it will not sit in appeal over the policy of the legislature in enacting a law. The courts cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. Courts are not to interfere with the economic policy which is the function of experts. It is not the function of the courts to sit in judgement over matters of economic policy and it must necessarily be left to the expert bodies. The courts have consistently refrained from interfering with economic decisions as it has been recognised that economic expediencies lack W.P.(C).No.3321 of 2008-S - 9 - adjudicative disposition and unless the economic decision based on economic expediencies is demonstrated to be so violative of constitutional or legal limits on power or so abhorrent to reason, that the court would decline to interfere. In matters relating to economic issues, the government has, while taking a decision, the right to “trial and error” as long as both trial and error are bona fide and within the limits of authority. [See **Balco Employees Union vs. Union of India** , (2001) 8 SCALE 541]. 13. The Apex Court in R.K.Garg vs. Union of India and Others (1981) 4 SCC 675 and in State of Madhya Pradesh and others vs. Nandalal Jaiswal and others,(1986) 4 SCC 566, has observed: “The laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. The legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particularly true in the case of legislation dealing with economic matters. In utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative judgment. The legislature, after all, has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events, self limitation can be seen to the path to judicial wisdom and institutional prestige and stability. If the above applies in regard to legislation relating to economic matters, it must apply equally in regard to executive action in the field of economic activities, though the executive decision may not be placed on as high as W.P.(C).No.3321 of 2008-S - 10 - pedestal as legislative judgment insofar as judicial deference is concerned. In complex economic matters, every decision is necessarily empiric and it is based on experimentation or what one may call 'trial and error' method and therefore, its validity cannot be tested on any rigid a priori considerations or on the application of any strait jacket formula. The court must, while adjusting the constitutional validity of an executive decision relating to economic matters, grant a certain measure of freedom or play in the joints to the executive.”. (14). In view of the aforesaid discussion, the second issue which we have framed for consideration requires to be answered against the petitioner. Therefore, writ petition requires to be rejected and it is rejected at the threshold itself. Ordered accordingly. H.L.Dattu Chief Justice K.M.Joseph Judge vku/DK.